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Feasibility Study

Study: How to design a compliant, privacy-preserving fiat stablecoin via zero-knowledge proofs

14. Dezember 2022

Lesezeit: 5 Minuten

Englisch-sprachige Krypto- und Tech-Enthusiasten aufgepasst: Have you ever heard of Stablecoins? They try to bring classical currencies to the blockchain (so called fiat money, such as the USD or the EUR). You might think that sounds something that a bank should do, but currently only fintechs do this regularly.  There was a lot of issues around stablecoins, mostly because of design issues.

We as a bank take the topic of stablecoins serious and together with our partners etonec GmbH and Mina Foundation want to present a paper discussing a fiat stablecoin design that combines highest compliance standards with privacy.

Why is this an important topic out our perspective? We believe that the efficiencies promised by means of blockchain technology can only be realized when payment in a conventional currency on the blockchain is also possible in a secure and compliant manner.

Particularly relevant here, in our view, is the model of the license-backed stablecoin. Here, the stablecoin represents a claim in the currency against the institution, which as a bank is authorized by the regulator via its banking license to create commercial money. We know this commercial bank money primarily from accounts - 80% of all payments are processed in this way. Thus, a digital euro can also be put on a blockchain as a stablecoin by a bank in similar quality as account money. We think this can be done even if there is no central bank digital currency (CBDC) out there yet.

Want to learn more? Then read our study or contact the authors Dr. Jonas Gross, Johannes Sedlmeir and Simon Seiter.